BlackRock CEO warns that a pause in US data center construction could lead to a recession, as a slowed buildout could turn massive investment into a massive crash.
A pause in US data center construction could lead to a recession, the CEO of investment firm BlackRock has suggested.
In comments to CNBC, BlackRock CEO Larry Fink warned that a countrywide moratorium in the US would lead to a recession, given how much of the economy now depends on the massive investments made over the past few years in AI infrastructure.
Real estate services firm JLL said that forecasted data center capacity through 2030 will require $3 trillion in total investment. Demand remains high, with 97 percent global occupancy and 77 percent of the construction pipeline pre-committed to tenants, according to JLL.
In the US alone, competition for data center capacity is fierce. Demand is now five times what it was two years ago, and vacancy rates have stayed at one percent for three years in a row.
JLL says investor confidence in the industry remains clear, with development accelerating to meet demand growth.
However, the US is also seeing significant opposition to data centers from local communities, government officials, and the media. Multiple data center moratoriums are being considered or implemented across the country. Of those implemented, the shortest lasted just a week, and the longest will stretch up to a year and a half.
Even traditionally data center-friendly jurisdictions, such as Virginia, are examining the effects of data centers on their local areas. Loudoun County, Virginia's data center corridor, voted last month to block new applications for facilities.
During the CNBC interview, Fink said that increasing opposition to data centers is mostly "misinformation," arguing that data centers are creating "more new jobs than ever before."
Moratoriums are just one log on the fire, however. Other significant issues could also delay the buildout of data centers in the US. Discussions around energy costs and grid upgrades, for example, have dominated the discourse and are far from resolved.
The industry's explosive growth has also led to shortages of equipment, raw materials, and labor, which are causing project delivery delays globally.